Oreninc Index Update: February 21, 2017

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ORENINC INDEX EXPLODES TO NEW 2017 HIGH

 

ORENINC INDEX – Tuesday, February 21, 2017

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AuRico Metals (TSX:AMI): 2016 year-end results and outlook 2017, Kemess Update

 

Last week index score: 90.26

This week: 112.76

 

The Oreninc Index continued to surge ahead in the week ending February 16, 2017 to 112.76 from 90.26 the previous week. Gold had another week of consolidation closing the week virtually the same as the previous week at $1,234 USD after hitting an inter-week high over $1,240 USD.

Total fund raising dollars announced grew to C$184.5m from C$166.1m, a three-week high, which included 17 brokered financings for a total of $134.0m within which were eleven bought-deal financings for $95.0m, a three-week high. The average offer size fell from $3.5m to $2.7m, a six-week low, whilst the total number of financings announced jumped to 68.

Whilst the gold price had an even week, the industry’s leading benchmark index, the van Eck managed GDXJ pulled back slightly and is now up 30.74% so far in 2017. However, the SPDR GLD ETF gold inventory continued to inch upwards and closed the week at 841.17 tonnes, after hitting a high of 843.54 on Wednesday, its highest volume since December 16, 2016.

The copper price softened during the week to close at $2.72 per pound despite a strike continuing at Escondida, the world’s largest copper mine that produces about 1.1 million tonnes a year of copper, some 5% of the world’s copper production.

The Dow Jones Industrial Average continued to plough ahead in record territory closing the week at 20,624 and the S&P/TSX Composite Index followed suit, reaching a record high of 15,864 on Thursday before closing the week at 15,838.

 

Financial news highlights

JDL Gold Corp. (TSX-V:JDL) opened a $15 million offering underwritten by a syndicate led by Haywood Securities Inc. on a bought deal basis and due to substantial demand, increased a non-brokered private placement to $50 million from $27 million.

The financings follow JDL and Luna Gold (TSX: LGC) agreeing to a business combination that will be named Trek Mining Inc. that will have the Aurizona gold project in Brazil as its lead asset that has a pre-feasibility study for a mine that would produce 150,000 ounces a year of gold.

The financial markets continue to warm to the re-emergence of Ecuador as a jurisdiction for mining investment as INV Metals Inc. (TSX:INV) opened a $24 million offering underwritten by a syndicate led by GMP Securities LP on a bought deal basis. This is another example of a bought deal financing being extended (from an initial $20 million), a trend discussed in last week’s Oreninc podcast with Mercenary Geologist Micky Fulp. INV Metals’ Loma Larga gold-copper project has a pre-feasibility study to produce 150,000 ounces a year of gold and many observers think it could be the next gold project into production in Ecuador once Lundin Gold (TSX: LUG) has built a mine at the Fruta del Norte deposit.

Leagold Mining Corp. (TSX-V: LMC) amended and restated a preliminary prospectus in connection with a subscription receipt financing underwritten by a syndicate led by BMO Capital Markets that included an indicative offering pricing range and a 5:1 share consolidation plan. Leagold announced in January that it would purchase the Los Filos gold mine in Mexico from Goldcorp Inc. (TSX: G) for $350 million by paying $279 million in cash and $71 million in stock. Leagold plans to raise the cash component from the net proceeds from the subscription offering and $200 million in term loan credit facilities. The offering price will be between $2.75 and $3.25 per subscription receipt to raise gross proceeds of between $130 million and $200 million.

Summary:

  • Number of financings jumped to 68, a 41-week high.
  • 17 brokered financings were announced for $134.0m, a three-week high.
  • Eleven bought-deal financings were announced for $95.0m, a three-week high.
  • Total dollars grew to $185.4m, a three-week high.
  • Average offer size up slightly to $2.7m, a six-week low

Major Financing Openings:

  • INV Metals Inc. (TSX:INV) opened a $ =INT( 24,000,000.00 )/1000000 24 million offering underwritten by a syndicate led by GMP Securities LP on a bought deal basis. The deal is expected to close on or about March 2, 2017.
  • JDL Gold Corp. (TSX-V:JDL) opened a $ =INT( 15,000,000.00 )/1000000 15 million offering underwritten by a syndicate led by Haywood Securities Inc. on a bought deal basis. The deal is expected to close on or about March 31, 2017.
  •  eCobalt Solutions Inc. (TSX:ECS) opened a $ =INT( 15,000,000.00 )/1000000 15 million offering underwritten by a syndicate led by Canaccord Genuity Corp. on a bought deal basis. Each unit includes a 1/2 warrant that expires in 24 months. The deal is expected to close on or about February 28, 2017.
  • TAG Oil Ltd. (TSX:TAO) opened a $ =INT( 10,000,250.00 )/1000000 10 million offering underwritten by a syndicate led by Mackie Research Capital Corp. on a best efforts basis. Each unit includes a 1/2 warrant that expires in 24 months. The deal is expected to close on or about March 15, 2017.

Major Financing Closings:

  • Los Andes Copper Ltd. (TSX-V:LA) closed a $ =INT( 8,040,000.00 )/1000000 8.04 million offering on a strategic deal basis.
  • Jet Metal Corp. (TSX-V:JET) closed a $ =INT( 6,833,610.00 )/1000000 6.83 million offering underwritten by a syndicate led by Mackie Research Capital Corp. on a best efforts basis.
  • Columbus Gold Corp. (TSX-V:CGT) closed a $ =INT( 5,040,000.00 )/1000000 5.04 million offering underwritten by a syndicate led by Beacon Securities Ltd. on a bought deal basis.
  • PMI Resources Ltd. (TSX-V:PMI) closed a $ =INT( 4,780,500.00 )/1000000 4.78 million offering on a best efforts basis.

Company news

Aurico Metals (TSX: AMI) C$1.15, Mkt Cap C$172.2 million

  • Reported its 2016 year end results and 2017 outlook
  • The company obtained royalty revenue of $8.1 million, an increase of $3.8 million (88%) over 2015.

At its Kemess project in British Columbia, Canada,

Aurico expects a final decision regarding the issuance of an environmental assessment certificate near the end of the first quarter for its Kemess gold-copper project in British Columbia. In January, the draft assessment issued by the British Columbia Environmental Assessment Office said the Kemess underground project would not result in significant adverse effects. The company also announced an updated mineral resource estimate for the Kemess East deposit that saw a 73.9 million tonne, or 188%, increase in the indicated resource. Going forward, Aurico plans to progress permitting and detailed engineering for Kemess underground, provide an update on the Kemess East deposit in the second quarter and complete the Kiska acquisition as well as continuing to look for accretive royalty acquisitions.

Conclusion: Aurico had a good 2016 and has several development milestones on the horizon in 2017 for its Kemess project that should drive value growth.

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